Israel and the Greek Cypriot Administration of Southern Cyprus (GCASC) are conducting talks aimed at possible cooperation in the energy sector. According to an S&P Global report, the two countries are close to finalizing a $1.5 billion deal for the supply of natural gas via a pipeline from Israel to Cyprus. This deal would represent Israel’s first gas sale to Europe.[i]
Israel’s record-breaking natural gas production infrastructure, especially before October 7, indicated that its export capacity was expanding beyond the region. The gas in question is expected to come from the Karish and Tanin platforms. Production from the Karish field is managed through Energean Power, a floating production, storage, and offloading (FPSO) unit with an annual capacity of 8 billion cubic meters (Bcm/y). The gas from Karish reaches northern Israel, near the Lebanese border.
Gas consumption in Europe is rising, with prices trading at approximately €40/MWh. Platts, a division of S&P Global Commodity Insights, reported that on October 11, the Netherlands TTF month-ahead price was at €39.55/MWh.[ii] Although fluctuations continue, supply chain participation from Mediterranean member states, despite increasing dependence on liquefied natural gas (LNG), remains key to balancing the energy supply-demand curve.
Following Hamas’ October 7, 2023 attacks on Israel, the government decided to shut down the Tamar platform as a security precaution. Operations resumed a month later. Israel, a major gas producer, now exports to Egypt and Jordan. Its production reached a record 24.7 billion cubic meters in 2023, according to data released by Israel’s Ministry of Energy in May.
The Karish gas field, which started production in October 2022, produced 2.77 billion cubic meters in the January-June period, compared to 1.97 billion cubic meters during the same period last year. Israel’s other two gas fields are Leviathan, which has been operational since 2019, and Tamar, operational since 2013.[iii]
In recent years, Israel has become a significant player in natural gas production. The discovery of large natural gas reserves has boosted the country’s energy independence and enabled it to begin exporting to neighboring countries. Among Israel’s largest natural gas fields are Leviathan, Tamar, and Karish. Leviathan, with reserves of approximately 620 billion cubic meters, is the largest. Tamar holds around 280 billion cubic meters, and the newer Karish field has around 40 billion cubic meters in reserves.
Israel’s total annual natural gas production capacity has reached 24.7 billion cubic meters, a record high in 2023. Karish alone produced 2.77 billion cubic meters in the first half of 2023, marking a 40% increase from the previous year. Leviathan has a production capacity of approximately 12 billion cubic meters per year, while Tamar can produce between 10 and 11 billion cubic meters annually.[iv]
Israel primarily exports natural gas to neighboring countries. Egypt and Jordan are its largest customers. As of 2023, Israel’s gas exports had increased by 50% compared to the previous year. Egypt uses Israeli gas for LNG production, while Jordan uses it for electricity generation. Israel is also reportedly in the final stages of a $1.5 billion agreement with Cyprus to export gas via a pipeline, which will last for 10 years and supply gas from the Karish field.[v]
Domestically, natural gas consumption in Israel is also rising rapidly, accounting for over 70% of the country’s electricity production. Gas from Karish is processed on the Energean Power FPSO platform, which has a production capacity of 8 billion cubic meters annually.
Israel’s increased natural gas production has made it a key regional energy player. Efforts to secure Europe’s energy supply have made Israeli gas a strategic resource. Additionally, Israel is one of the founding members of the Eastern Mediterranean Gas Forum (EMGF), which aims to enhance energy cooperation in the region.[vi] Israel and GCASC initiated their energy collaboration as an alternative to political tensions with Turkey in the early 2010s. Following economic and commercial cooperation between the two actors in the early 2010s, their relationship shifted toward strategic cooperation in response to Israel-Turkey tensions.
Energy cooperation between Israel and GCASC began in the early 2010s with the discovery of significant natural gas reserves in the Eastern Mediterranean. During this period, both countries discovered large natural gas fields, accelerating their energy partnerships. Israel discovered the Tamar and Leviathan fields in 2009 and 2010, respectively, increasing its energy independence and positioning it as a major player in the regional energy market. In 2011, GCASC discovered the Aphrodite field, which was found to contain significant gas reserves. These discoveries laid the groundwork for joint energy projects between the two countries.
In 2012 and 2013, Israel and GCASC formalized their energy cooperation with agreements focused on the development of shared energy resources and maritime boundary delineation. In 2017, Israel, GCASC, Greece, and Italy agreed on the EastMed Pipeline Project, which aims to transport natural gas from the Eastern Mediterranean to Europe. This project has further strengthened Israel and GCASC’s energy partnership.
The transportation of energy resources to Europe plays a critical role in ensuring Europe’s energy security. Efforts to reduce Europe’s reliance on Russian gas after the Russia-Ukraine war have made Israel and GCASC’s energy cooperation increasingly strategic.
[i] “Israel and Cyprus in talks for natural gas supply”, KNEWS, https://knews.kathimerini.com.cy/en/news/israel-and-cyprus-in-talks-for-natural-gas-supply, (Accessed: 15.10.2024).
[ii] “Israel in Talks with Cyprus on ‘Possible Cooperation’ in Energy”, EnergyNews, https://energynews.pro/en/israel-in-talks-with-cyprus-on-possible-cooperation-in-energy/, (Accessed: 15.10.2024).
[iii] “Israel and Cyprus in talks over potential gas supply deal”, en.philenews, https://in-cyprus.philenews.com/insider/israel-and-cyprus-in-talks-over-potential-gas-supply-deal/, (Accessed: 15.10.2024).
[iv] “Israel in talks with Cyprus on ‘possible cooperation’ in energy”, S&P Global, https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/natural-gas/101424-israel-in-talks-with-cyprus-on-possible-cooperation-in-energy, (Accessed: 15.10.2024).
[v] “Israeli Ministry of Energy data, confirming the natural gas production and export figures for 2023”, Energy Sea, https://www.energy-sea.gov.il/home/oil-natural-gas-e-p-in-israel/, (Accessed: 15.10.2024).
[vi] “Energean company statements and production reports, providing details on the Karish field’s production capacities and export plans”, Energean, https://www.energean.com/media/5794/2023-annual-report.pdf, (Accessed: 15.10.2024).
